Hagar v. Zaidman, Civ. No. 5-91-382 (WWE).
| Decision Date | 19 August 1992 |
| Docket Number | Civ. No. 5-91-382 (WWE). |
| Citation | 797 F. Supp. 132 |
| Court | U.S. District Court — District of Connecticut |
| Parties | Alan HAGAR and Acu-Card, Inc., Plaintiffs, v. Serge ZAIDMAN and P.S.C.G.S., Inc., d/b/a Sportcard Authentication and Grading Service, Defendants. |
Edward N. Lerner, Brown, Paindiris & Zarella, Fairfield, Conn., Eric R. Gaynor, Brown, Paindiris & Zarella, Hartford, Conn., for plaintiffs.
Stefan Underhill, Day, Berry & Howard, Stamford, Conn., David Medina, Thomas J. Byrne, Pullman & Comley, Bayport, Conn., for defendants.
RULING ON DEFENDANTS' MOTION TO DISMISS OR TRANSFER
Defendants Serge Zaidman and Professional Sportcard Grading Service, Inc. "PSG", move, pursuant to Fed.R.Civ.P. 12(b)(2), to dismiss the complaint of Plaintiffs Alan Hagar and Acu-Card, Inc. "ACI" for lack of personal jurisdiction, and in the alternative move, pursuant to Fed.R.Civ.P. 12(b)(3) and 28 U.S.C. § 1404(a), to transfer this action to the Central District of California. Motion papers reveal the following facts.
Hagar is a Connecticut resident. ACI is a Connecticut corporation with its principal place of business in Stamford, Connecticut. Zaidman is a California resident. PSG is a California Corporation with its principal place of business in Long Beach, California. In September, 1990 Plaintiffs and PSG entered into an eight-part agreement the "Agreement" in which Plaintiffs would sell copyrights and grant licenses to PSG. Zaidman was president of PSG at this time.
The events leading up to the signing of the Agreement, as gleaned from the complaint and the parties' affidavits, may be summarized as follows. In 1990, Hagar had a controlling interest in ACI, which dealt in the encapsulation of sport trading cards. Hagar and Zaidman first discussed the sale of assets from Hagar and ACI to Zaidman in Long Beach, California in June, 1990. In July, 1990, while Hagar was in California, the parties reached an understanding whereby Zaidman and PSG would purchase the right to use sport card encapsulation technology and equipment from Hagar and ACI, and Hagar would help PSG utilize the equipment and technology in California.
Zaidman subsequently traveled to Connecticut to review the equipment in question and discuss further terms of the contract. The circumstances of this trip are somewhat unclear. Hagar avers this trip occurred in July and lasted for 3 days, while Zaidman claims it was limited to 1 day in September. For the purposes of the instant motion, the court will defer to Hagar's version of events.
On October 13, 1990, Hagar and Zaidman signed the eight part Agreement in California. Subsequently, some payments were made to Hagar and some equipment was delivered by Hagar to PSG in California. In the instant action, Plaintiffs allege Defendants have breached the Agreement and have committed trademark and copyright infringement.
Defendants claim that they lack the contacts with the state of Connecticut necessary to make them subject to the jurisdiction of this court, or in the alternative that this action should be transferred due to improper venue. For the following reasons, Defendants' motion to transfer will be denied and their motion to dismiss will be granted.
A trial court has considerable procedural leeway in deciding a pretrial jurisdictional motion. Should the court find the affidavits and supporting memoranda to be sufficient, the court need not conduct an evidentiary hearing. Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981). Where the personal jurisdictional issue is in dispute, the nature of a plaintiff's obligation varies depending on the procedural posture of the litigation. Prior to discovery, a plaintiff may defeat a jurisdictional challenge by pleading legally sufficient allegations of jurisdiction in good faith. After discovery, a plaintiff must submit an averment of facts that, if credited by the trier, would suffice to establish jurisdiction over the defendant. Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir.1990), cert. denied, ___ U.S. ___, 111 S.Ct. 150, 112 L.Ed.2d 116 (1990).
An examination of the record in this case indicates that limited discovery has occurred to date. Therefore, the court will require that Plaintiff merely plead in good faith legally sufficient allegations of jurisdiction. The court's jurisdiction over corporate defendant PSG and Zaidman will be discussed in turn.
Two conditions must be met for a court to assert in personam jurisdiction over a foreign corporation. First, there must be a jurisdictional statute that reaches the conduct of the defendant. Fuehrer v. Owens-Corning Fiberglas Corp., 673 F.Supp. 1150, 1152 (D.Conn.1986). A district court sitting in diversity must look to the forum state to determine jurisdiction. Arrowsmith v. United Press International, 320 F.2d 219, 231 (2d Cir.1963) (en banc). The relevant statute is the Connecticut long-arm statute, Conn.Gen.Stat. § 33-411.
In addition, the existence of jurisdiction cannot exceed constitutional due process limitations. Such limitations require that a nonresident corporate defendant have "minimum contacts" with the forum state such that it would reasonably anticipate being haled into court there. Wide-World Volkswagen Corporation v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). Maintenance of the suit in the forum state cannot "offend `traditional notions of fair play and substantial justice.'" International Shoe Co., v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940).
The Connecticut long-arm statute, Conn. Gen.Stat. § 33-411, allows a Connecticut court to assert jurisdiction over a foreign corporation if that corporation transacts business in the state or if the corporation has committed certain acts which have a sufficient nexus to the state. See § 33-411(b); § 33-411(c). To the extent relied upon by Plaintiffs, § 33-411 provides:
Conn.Gen.Stat. § 33-411(b); § 33-411(c)(1) & (2) (1992).
Plaintiffs argue that the following acts of PSG subject it to jurisdiction under § 33-411: it has transacted business in Connecticut under § 33-411(b); it has made a contract in Connecticut under § 33-411(c)(1); and it has solicited business in Connecticut under § 33-411(c)(2). Each argument will be discussed in turn.
For a corporation to be subjected to this court's jurisdiction under § 33-411(b), it must have transacted business in Connecticut, and the cause of action under which the corporation is being sued must have arisen from that business. Electric Regulator Corp. v. Sterling Extruder Corp., 280 F.Supp. 550, 554 (D.Conn.1968). As noted above, PSG is a California corporation with its principal place of business in California. It has never had an office in Connecticut, nor does it own any property or maintain any financial accounts in Connecticut.
Plaintiffs argue that the three day trip by PSG president Zaidman to Connecticut in July, 1990 constitutes a business transaction for purposes of § 33-411. Plaintiffs cite Zartolas v. Nisenfeld, 184 Conn. 471, 474, 440 A.2d 179 (1981), for the proposition that a "single business transaction" may suffice under Conn.Gen.Stat. § 52-59b for assertion of jurisdiction over a person. Plaintiffs maintain that Zaidman's visit to Connecticut was such a single transaction, and that the Zartolas holding extends to business transactions by corporations under § 33-411. There are two problems with this argument.
First, the Zartolas case concerned the alleged breach of a warranty deed executed in Iowa and involving real property in Connecticut. The Connecticut Supreme Court held that the execution of such a deed was "purposeful Connecticut related activity" and fell within § 52-59b. Zartolas, 184 Conn. at 472-73, 475, 440 A.2d 179. The court cannot extend that holding to the instant case, where the most the defendant corporation did was conduct a portion of ongoing contract negotiations in Connecticut. When the subject of an agreement is real property located in Connecticut, it can be safely assumed the parties have purposefully directed their efforts to Connecticut. The court will not assume such purpose also existed for the sale to a California corporation of equipment located in Connecticut.
Second, an examination of the instant case in light of Judge Timbers' oft-cited opinion in Electric Regulator shows that § 33-411(b) cannot be employed here. The definition of a business transaction under § 33-411(b) is not interpreted broadly, but rather limited by its terms to transactions which violate § 33-396, which requires a corporation transacting business in the state to obtain certification. Electric Regulator, 280 F.Supp. at 554. Several activities by a corporation in Connecticut, including some solicitation of business, do not mandate that a corporation obtain certification. Judge Timbers' holding in Electric Regulator...
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